EUR/USD – Euro Yawns as German CPI Matches Estimate

The euro is having an uneventful Wednesday. Currently, the pair is trading at 1.1973, up 0.06% on the day. On the release front, German Final CPI posted a small gain of 0.1%, matching the estimate. German WPI gained 0.3%, above the forecast of 0.1%. Eurozone data met expectations, with Employment Change gaining 0.4% and Industrial Production posting a gain of 0.1%. Inflation will also be the focus in the US, led by PPI, which is expected to improve to 0.3%. On Thursday, the US will release CPI and unemployment reports.

The German economy is the strongest in Europe, but even Germany finds itself grappling with stubbornly low inflation, which has also been a chronic problem in the US, Japan and throughout the Eurozone. German Final CPI, the primary gauge of consumer inflation, slowed to 0.1% in September, down from 0.4% in the August release. On the employment front, there was positive news as Eurozone Employment Change posted a second straight gain of 0.4%. This reflects stronger employment numbers in the eurozone, as stronger economic conditions have improved the labor market and pushed unemployment rates lower.

The US economy has been performing well in the second quarter. Preliminary GDP came in at a sizzling 3.0%, and the labor market remains close to capacity. Still, the Achilles heel of the economy remains stubbornly low inflation levels. Wage pressure has been limited, despite the fact that many businesses cannot fill job openings. Weak inflation has hampered the Fed’s plans to raise interest rates a third time this year, and the odds of a December hike have dipped to just 31%, as the markets are increasingly doubtful that the Fed will make a move before next year. Will the inflation picture improve? We could see better numbers this week for August inflation – PPI is expected to improve to 0.3% on Tuesday, and the same gain is forecast for CPI on Wednesday. Both estimates are higher than the July readings.

EUR/USD Fundamentals

Wednesday (September 13)

2:00 German Final CPI. Estimate 0.1%. Actual 0.1%

2:00 German Final WPI. Estimate 0.3%. Actual 0.1%

3:00 Eurozone Employment Change. Estimate 0.3%. Actual 0.4%

5:00 Eurozone Industrial Production. Estimate 0.1%. Actual 0.1%

Tentative – German 10-y Bond Auction

8:30 US PPI. Estimate 0.3%

8:30 US Core PPI. Estimate 0.3%

10:30 US Crude Oil Inventories. Estimate 4.1M

13:01 US 10-y Bond Auction

14:00 US Federal Budget Balance. Estimate -118.6B

Upcoming Key Events

Thursday (September 14)

8:30 US CPI. Estimate 0.3%

8:30 US Core CPI. Estimate 0.2%

8:30 US Unemployment Claims. Estimate 303K

*All release times are GMT

*Key events are in bold

EUR/USD for Wednesday, September 13, 2017

EUR/USD Wednesday, September 13 at 5:35 EDT

Open: 1.1966 High: 1.1995 Low: 1.1961 Close: 1.1973

EUR/USD Technical

S1

S2

S1

R1

R2

R3

1.1611

1.1712

1.1876

1.1996

1.2018

1.2108

EUR/USD posted gains in the Asian session and is showing limited movement in European trade

1.1876 is providing support

1.1996 is under pressure as a resistance line. It could break in the North American session

Further levels in both directions:

Below: 1.1876, 1.1712 and 1.1611

Above: 1.1996, 1.2018, 1.2108 and 1.2221

Current range: 1.1876 to 1.1996

OANDA’s Open Positions Ratio

EUR/USD ratio is almost unchanged in the Wednesday session. Currently, short positions have a majority (58%), indicative of EUR/USD reversing directions and moving lower.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.

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